Starbucks and Nestlé to create coffee alliance

Starbucks and Nestlé have announced a global coffee alliance that will see the two firms cooperate on sourcing and distribution.

If the deal, which still needs regulatory approval, goes ahead, Starbucks will take a lead in sourcing while Nestlé will use its consumer goods expertise to launch Starbucks branded products in more outlets and countries.

As part of the deal Nestlé will pay Starbucks $7.15bn to license the Starbucks brand.

This will allow Nestlé to use its existing position as one of the world’s largest food producers to expand Starbuck products to different consumer outlets – including a range of Nespresso pods. Nestlé also hopes it will improve its coffee presence in food services.

Mark Schneider, CEO of Nestlé, said the deal would bring together “three iconic brands” of coffee, Starbucks, Nescafé and Nespresso. “Both companies have true passion for outstanding coffee and are proud to be recognised as global leaders for their responsible and sustainable coffee sourcing,” he said.

Kevin Johnson, president and chief executive officer of Starbucks, said the deal was part of his company’s efforts to “meet changing consumer needs”.

In a statement the two firms said Starbucks will “lead in sourcing, roasting and Starbucks global brand management” for the alliance.

Starbucks will also keep a “significant stake” as a licensor and supplier of roast and ground coffee products.

The two firms hope the deal will get regulatory approval this summer or early autumn.